Who are the 'Principals' referenced in the Kidokinetics non-disclosure agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
ulfill its obligations under this Agreement; and
- 10.2.8. Each Principal and each Principal's spouse will personally execute and bind himself or herself to the Guaranty and Confidentiality and Non-Compete Agreement, in the forms of Attachments E and F to this Agreement, respectively. Each shall jointly and severally guarantee Franchisee's performance of all of Franchisee's obligations, covenants and agreements under the Agreement, and otherwise bind themselves to the terms of this Agreement as stated herein, pursuant to the terms and conditions of the Guaranty and Confidentiality and Non-Compete Agreement.
- 10.3. Appointment of Manager. Franchisee, or its shareholder or member if Franchisee is an entity, must devote his/her full-time attention and best efforts to the management and operation of the Franchised Business,
or may delegate the day-to-day operations of the Franchised Business to a manager ("Manager"). Franchisee may not appoint a Manager who is not the Franchisee or Principal of the Franchisee, if an entity, without the approval of Franchisor. All requests regarding appointment of a Manager must be in writing. The Manager shall meet Franchisor's standards and criteria, as set forth in the Franchise Operations Manual or otherwise in writing by Franchisor, and will be an individual otherwise acceptable to Franchisor in its sole discretion. The Manager will devote his or her full time and best efforts to the supervision and management of the Kidokinetics Business, and may not engage in any other business activity without the Franchisor's consent, which may be withheld in Franchisor's sole discretion. The Manager will satisfy the training requirements set forth in Article 6. If the Franchised Business is operated by a Manager, then a Principal of Franchisee must devote at least 20 hours of work per month to the operation of the Franchised Business.
- 10.3.1. If the Manager is not able to continue to serve in such capacity, or no longer qualifies to act as such in accordance with this Agreement, Franchisee will promptly notify Franchisor and request approval for a replacement within 30 days after the Manager ceases to serve, such replacement being subject to the same qualifications required by this Agreement (including, but not limited to, completing all training and obtaining all certifications required by Franchisor). Franchisor will approve or disapprove of the replacement Manager within 30 days. Until such replacement is designated, Franchisee will provide for interim management of the Kidokinetics Business, who will act in accordance with the terms of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the term 'Principals' refers to individuals who are shareholders or members of the franchisee entity. These individuals, along with their spouses, are required to personally execute and adhere to the Guaranty and Confidentiality and Non-Compete Agreement. This agreement ensures that these individuals are bound by the obligations and covenants outlined in the franchise agreement.
The FDD specifies that each Principal and their spouse must guarantee the franchisee's performance of all obligations, covenants, and agreements under the franchise agreement. This means that the Principals are personally liable for the franchisee's adherence to the terms of the agreement. They must also comply with the confidentiality and non-compete provisions, protecting Kidokinetics's trade secrets and business interests.
Furthermore, if the franchisee is an entity, a Principal must devote full-time attention to the management and operation of the franchised business. Alternatively, they can delegate day-to-day operations to a manager, but even in this case, a Principal must dedicate at least 20 hours per month to the business. This ensures that there is active oversight and involvement from a responsible party, even if daily tasks are handled by a manager. The franchisor retains the right to approve or disapprove of the appointed manager.
In the event of a transfer of the franchise, if the franchisee or any Principal finances any part of the sale price, they must agree that the transferee's obligations to them are subordinate to the transferee's obligations to Kidokinetics. Additionally, the franchisee and its Principals, along with their families, must comply with the post-termination provisions of the franchise agreement. These measures are in place to protect the franchisor's interests and ensure a smooth transition in the event of a transfer or termination.